China Seeks Weaker Export Controls on Military Equipment

China asks Obama administration to loosen controls on exports of high-tech military goods and lift all sanctions

China has supplied the Obama administration with a detailed list of space, military, and defense technology controls that it wants changed, and an interagency review is underway to meet some of Beijing’s demands, according to U.S. officials.

The Chinese government list of U.S. defense and dual-use civilian-military trade controls and policy changes was sent recently to the Commerce Department in preparation for an upcoming meeting of the U.S.-China Joint Commission on Commerce and Trade (JCCT).

The request includes lifting all sanctions imposed by Congress after the 1989 Tiananmen Square massacre; permitting transfers of 15 Black Hawk engines for helicopters sold in the 1980s prior to those sanctions; and the lifting of U.S. sanctions on five Chinese companies involved in past illicit arms sales to Iran, and other rogue states, according to officials familiar with internal reports.

Other controls Beijing wants eliminated as part of the JCCT process include the removal of limits on commercial satellite cooperation and exports; access to integrated circuit technology; permission to buy high performance computers; allowing transfers of deep water oil and gas exploration equipment; the easing of civilian nuclear technology controls; and greater access to U.S. aerospace and electronics technology.

Beijing also wants the State Department’s arms export control list, known as the U.S. Munitions List, downgraded and administered by the trade-oriented Commerce Department as part of its Commerce Control List. The change would ease the export of sensitive defense technology to China.

“The administration has asked agencies to discuss what to give the Chinese” from the list, said one official close to the discussions.

Additionally, the Chinese list includes a request that the administration block a provision of the fiscal 2014 House appropriations bill that would restrict exports of U.S. information technology to China.

“I’m surprised the administration would allow the Chinese government to interfere with the operation of the American government,” said Rep. Frank Wolf (R., Va.) in an interview. He added that China’s demand for the administration to change the appropriations bill was “very troubling.”

Wolf is chairman of the appropriations subcommittee for the Commerce Department that drafted the legislation. It was approved by the committee following concerns that state-owned Chinese telecommunications companies, like Huawei Technologies and ZTE, are engaged in illicit cyber espionage against the United States.

The Chinese also asked the administration to allow the Commercial Aircraft Corp. of China (COMAC) to be named a “validated end-user,” status that would permit easy exports of sensitive defense-related aircraft technology.

COMAC is linked to China’s main military manufacturer, Aviation Industries Corp. of China (AVIC) that produces fighters, nuclear-capable bombers, and 90 percent of the aviation weapon systems used by the Chinese military. An AVIC subsidiary, China National Aero-Technology Import & Export Corp., was sanctioned by the U.S. government in 2008 for illicit arms sales to Iran and Syria.

A U.S. official said granting COMAC the validated end-user status would increase the risk that militarily significant U.S. aircraft technology will boost China’s military buildup.

The list of export control concessions sought by Beijing was produced by China’s Ministry of Commerce. It will be presented formally during an upcoming meeting of the Joint Commission, to be held in Beijing in November or December.

A spokeswoman for the office of the U.S. Trade Representative, the agency that along with the Commerce Department is in charge of the U.S. side of the joint commission, had no comment. Carol Guthrie, the spokeswoman, said no date has been set for the next commission meeting. The last joint commission session was in December.

John Bolton, former undersecretary of state for international security, said he opposes making concessions on export controls of high-technology trade with China. He noted China’s failure to cooperate with the U.S. government request to return fugitive former National Security Agency contractor Edward Snowden, who sought refuge first in Hong Kong before being granted asylum in Russia.

“I would make no concessions to China, and I would make it clear that this is a partial repayment for their refusal to hand over Snowden to us,” Bolton said in an email. “Neither China nor Russia have felt any pain for their lack of cooperation, but it’s never too late to start.”

William C. Triplett, former Republican counsel for the Senate Foreign Relations Committee, said giving in to Chinese demands to ease export controls would compound the administration’s recent mishandling of Syria policy and assist China’s military buildup.

“Granting anything on this list would cause total consternation in Tokyo, Manila, and Delhi,” Triplett said.

“And after the events of the past week, why would President Obama want to look weak to a Chinese communist leader who is a throw-back to the Mao era?” he asked.

China’s list asked that the administration remove sanctions on five Chinese entities that were involved in proliferation violations. They include Poly Technologies, China Precision Machinery Import-Export Corp., Kunlun Bank, and Zhuhai Zhenrong.

China also sought to gain access to robotic fiber placement machines—technology restricted for export because they can be used to manufacture composite material used in radar-evading stealth weapons.

Commerce Department and USTR officials met last week in Beijing with Chinese counterparts for a mid-year review of the joint commission.

The U.S. delegation was led by Wendy Cutler, acting deputy U.S. Trade Representative, and Francisco Sanchez, undersecretary of commerce for international trade. The officials discussed “strengthening the increasingly productive trade relationship” with China at the talks, according to a Commerce Department press release.

“The JCCT remains an important venue for us to address concrete trade and investment issues, and we look forward to working on these issues with our Chinese counterparts in the weeks and months ahead,” Cutler said.

The statement made no mention of China’s request to loosen U.S. export controls on defense and dual-use technology.

The Chinese government has been pressing the Obama administration to loosen its export control policies on high-technology defense and space goods, claiming China is unfairly treated by the trade restrictions.

Sanctions imposed after the Tiananmen massacre, when Chinese military forces were called in to disperse unarmed pro-democracy protesters from Beijing’s main square, cannot be lifted by the administration and would require congressional action.

However, the administration has sought to carry out a large-scale loosening of export controls as part of a reform initiative launched two years ago.

Last year, the administration notified Congress that it was granting a high-technology arms export license to a Hong Kong satellite company with Chinese ties. The license was opposed by congressional Republicans who said it violated sanctions on Beijing.

U.S. Ambassador to China Gary Locke announced earlier this year that the administration planned to loosen export controls on nearly one-third of the 141 high-technology items sought by China that now require stringent national-security export licensing.

Critics of the administration’s export control reform say the new policy will boost China’s large-scale military buildup. There is no difference between civilian and military manufacturers in China.

A joint State Department-Pentagon report to Congress published in April warned that easing controls on U.S. satellite exports “could significantly improve the military potential of another country,” believed to be a reference to China.

“Space assets provide important military and intelligence capabilities ranging from strategic intelligence collection to improved tactical communications,” the report said. “If they can succeed in acquiring the necessary and sufficient technology and expertise, it could translate into a significant enhancement of that nation’s military.”

In recent years, U.S. security agencies in charge of enforcing export controls have prosecuted numerous cases of Chinese nationals or their surrogates for stealing or illicitly purchasing embargoed U.S. technology with military applications.

Larry Wortzel, a former military intelligence official, testified before the congressional U.S.-China Economic and Security Review Commission in July that Chinese economic espionage and cyber theft has harmed U.S. national security.

“China’s cyber espionage against the U.S. government and defense industrial bases poses a major threat to U.S. military operations, the security and well-being of U.S. military personnel, the effectiveness of equipment, and readiness,” Wortzel said.

“China’s cyber espionage against U.S. commercial firms poses a significant threat to U.S. business interests and competiveness in key industries,” he added.

According to Wortzel, Chinese companies steal U.S. technology and data as a more cost effective way of avoiding investment and time in research and development programs.

“These thefts support national science and technology development plans that are centrally managed and directed by the PRC government,” he said.